share this article!

More than 1,800 borrowers will get $55.6 million in student debt relief, according to the Department of Education. (C) 2020 Erin Scott/Bloomberg Photographer Bloomberg Finance LP is a financial services firm based in New York
The Department of Education (Department) stated today that it has approved over 1,800 loan forgiveness petitions from students who attended three different schools. The debtors will receive a total cancellation of their loans, totaling $55.6 million in student debt relief. To achieve this forgiveness, the Biden Administration is using the “borrower defense to repayment” rule, commonly known as “borrower defense.” The Secretary of Education has the ability under the Higher Education Act to forgive debts of borrowers who have been deceived or lied to by their college or university.
The Department’s borrower defense law is a vital tool for protecting borrowers from having to repay debt that should be forgiven as a result of predatory college conduct. In cases of educational misbehavior, the regulation directs the Secretary of Education to erase federal student loan debt. The right to borrower defense has been written into every federal Direct Loan borrower’s promissory note since 1994, but it was catalyzed by a single catastrophic event in 2015: the collapse of Corinthian Colleges, Inc., a large for-profit college chain with a history of fraud and misconduct toward its students.
Westwood College, Marinello Schools of Beauty, and the Court Reporting Institute were among the colleges mentioned in today’s statement. Each of these schools has a shady history, and they are all for-profit institutions.
Westwood College “engaged in pervasive statements about the capacity of students to transfer credits,” according to the Department. Furthermore, the college made “widespread, material misrepresentations” about the quality and career prospects of its criminal justice programs, which was a common program in for-profit colleges as they transitioned from their historical foundation in technical training to more traditional higher education programs. (Read Tressie McMillin Cottom, PhD’s article Lower Ed for more information.) Westwood is responsible for the great bulk of the approved applications, accounting for $53 million in debt relief and 1,600 applications.
ADDITIONAL INFORMATION FOR YOU
Marinello Schools of Beauty was investigated by the Department from 2009 until it closed in 2016. The Department discovered that the cosmetology school left students without instructors for weeks or months at a time, leaving them unprepared to pass license exams. More than 200 claims were authorized, resulting in a total debt cancellation of $2.2 million. After a 2018 lawsuit against the Department under then-Secretary Betsy DeVos, at least three students from the for-profit institution received loan discharges for falsely declaring student aid eligibility.
Marinello Schools of Beauty was sued in 2013 under the False Claims Act, and the case was eventually settled for more than $8.6 million with the Department of Justice in 2016. After the Department of Studies refused its recertification to participate in federal student assistance programs, the organization was unable to continue operating due to its reliance on students using government student loans and grants to fund their education. The United States Attorney for the Southern District of California stated the school “manipulated the system in order to unlawfully gain student aid payments without which the school could not function,” according to a press release from the settlement.
Last but not least, there’s the Court Reporting Institute. The Department discovered that the school overstated the length of time it would take to complete the court reporting program from 1998 until its closing in 2006, resulting in relatively few students finishing the program. Fewer than 6% of students actually graduated, and those who did took significantly longer than they were expected to. With 18 claims and around $340,000 in student debt relief, the Court Reporting Institute accounted for a modest percentage of the forgiveness.
The announcement comes after the Department of Justice took many steps to assist debtors under President Joe Biden and Secretary Miguel Cardona. According to the press release, the Biden Administration has revoked approximately 92,000 loans totaling more than $1.5 billion. The Department of Justice expedited the borrower defense process in March, estimating that 72,000 borrowers would benefit from a $1 billion debt cancellation. Secretary Cardona approved a $500 million debt forgiveness program for 18,000 former ITT Technical Institute students.
In addition, the Department said that it will make it easier for student borrowers with a total and permanent handicap to get their loans canceled. It also paused collections for delinquent borrowers who weren’t qualified for the federal student loan payment suspension under the former bank-based system.
In addition to other issues relating to student loans and higher education in general, the Department has recommended re-regulating borrower defense. Many believe a new regulation is needed after Secretary DeVos modified it, making it far more difficult for misled borrowers to receive relief. This fall, expect to hear more about it./nRead More

share this article!